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Betting on local gas production and gas infrastructure is key for supply diversification in CEE

One year ago, transmission system operators (TSOs) from Greece, Bulgaria, Hungary and Romania, came together for the creation of a vertical gas corridor that would enhance supply diversification and unlock the potential of LNG to reach these markets. Almost one year later, the main gas industry players convened in Sibiu, Romania, for the Central European Natural Gas Congress organised by Transgaz, evaluating the diversification of gas supply sources and transmission routes in Central, South-Eastern Europe and the Balkans.

According to Franck Neel, President of the Petroleum and Gas Employers’ Federation, the region has an enormous local potential and “it is not the best choice to always look at outside Europe, without supporting oil and gas companies in the region.” He pointed out that encouraging local production is a prerequisite for diversification, bringing new jobs and more security of supply.

Of course, it is important to reinforce the infrastructure and push for more competition in terms of prices and logistics coming from within Europe. “We still need to import gas and if we look at the costs of transporting gas from Texas to Greece, it is cheaper than from Greece to Romania,” Mr Neel said. A clear commitment to the future is needed, he continued, as gas must be considered a transitional fuel: “Applying CBAM to the gas sector could make us more competitive.”

Kleopatra Avraam, Strategic Planning Senior Manager at the Greek TSO DESFA, focused instead on the mid-term solutions, as Greece is still investing in natural gas projects like the ICGB, the Revithoussa terminal, the new interconnector with North Macedonia. “At some point, we will be ready to export more than 9 billion cubic metres (bcm) of gas,” she said. “Therefore, funding is also an important aspect, as the infrastructure is expensive.”

Kateryna Kovalenko, Head of the Strategy Division at the Gas TSO of Ukraine underlined how Europe is now living in a transformation phase, both because of the decarbonisation objectives but also because of the war in Ukraine, whose infrastructure can still play an important role, having the most extensive storage in Europe.

Indeed, the lower cost of services in Ukrainian underground gas storage facilities and the gas transportation system is attracting foreign traders in the context of high PSG utilisation levels in EU countries. “We still need support to connect places where gas is produced to those where is needed,” Ms Kovalenko added, mentioning, for example, the Trans Balkan pipeline, which currently has an under-utilised capacity of 18 million cubic metres (mcm) of gas per day and enabling reverse flow would be beneficial for the whole region.

Also, Kiril Ravnachki, Member of the Management Board of Bulgartransgaz mentioned the importance of developing infrastructure as the backbone for regional competition to be developed. He recalled the crucial role played by the Chiren underground gas storage facility, whose construction works for its expansion officially started. According to Bulgartransgaz, the expanded gas storage will provide more flexibility and security to the natural gas market in Bulgaria and the region.

Another land-locked country, Hungary, has also developed its interconnections with neighbouring countries and, once the expansion of the Krk LNG terminal is completed (from 2.9 bcm to 6.1 bcm), the entry capacity to Hungary could double as well, as underlined by Gábor Szokodi, Director for Trading and Business Development at the Hungarian TSO FGSZ.

Providing the view of Gas Infrastructure Europe (GIE), Gabrielle Lelievre, GIE’s Communication Advisor, summarised important actions that must be taken to strengthen the regional gas market: first, the different starting points of the countries must be taken into consideration when drafting regulations and legalisations; second, cross-border activities must be facilitated; third, there should be a support scheme for the molecules as there is for electrons; fourth, it is important to speed up permitting; fifth, we must build on the synergies that exist between the gas and the electricity systems; and finally, it is crucial to raise awareness on the role of low-carbon and renewable gases.

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